PUBLIC SUBMISSION

As of: 5/1/15 9:30 AM

Received: April 29, 2015

Status: Pending_Post

Tracking No. 1jz-8ike-lwj6

Comments Due: July 06, 2015

Submission Type: API

Docket: EBSA-2010-0050

Definition of the Term ‘‘Fiduciary’’; Conflict of Interest Rule—Retirement Investment Advice; 

Notice of proposed rulemaking and withdrawal of previous proposed rule.

Comment On: EBSA-2010-0050-0204

Definition of the Term Fiduciary; Conflict of Interest Rule-Retirement Investment Advice

Document: EBSA-2010-0050-DRAFT-0254

Comment on FR Doc # 2015-08831

Submitter Information

Name: Richard Thoreson, CFA

Address: 

210 Broadway N

Suite 400

FARGO, ND, 58102

Email: rick@thoresonsteffes.com

Phone: 7014783338

Organization: Thoreson Steffes Trust Company

General Comment

I applaud the intent of the law. Like so many actions taken by the Department of Labor to 

protect employees, it has unintended consequences. 

For 25 years I worked for a national bank with an employee benefits area that helped businesses 

create and administer retirement plans. In 1987 most of those plans were defined contributions 

plans with a single fund in which all participants held an interest in a single balanced portfolio. 

In some instances, that balanced portfolio reflected some personal biases of the company 

management which was frequently ill advised, but in 90% of the cases the investment process 

was managed by a professional who not only appreciated their fiduciary role and it's liabilities, 

but didn't require the threat of fines or other punishment by regulators to do the right thing. 

Competition for the client's business was the best insurance that fees would be fair and the 

services and performance were competitive. 

With the advent of the 401k plan employers were held to a higher standard of care and 

participant direction became the norm so employers could avoid the liability of investing 

Page 1 of 2

https://www.fdms.gov/fdms/getcontent?objectId=0900006481ac1a0d&format=xml&showor... 5/1/2015
employees funds. My experience was most often negative. Employees chose funds based on the 

most recent performance and didn't monitor their investments, took far more risk than intended 

or no risk at all and ended up with poor results; well below the results they would have 

experienced under a single balanced fund. The worst instance was a finance manager for a small 

city who insisted we add a technology fund to the menu of choices in 1998. Initially the trust 

company, as administrator, advised the city as trustee to cap the allocation any participant could 

have at 10%. A year later, the finance manager insisted we remove the cap (which was difficult 

to administer in the first place). Between the peak in 1999 and the bottom in 2002, finance 

manager, who was the most technically qualified to manage his own investments, saw his 

balance decline from over $600,000 to $120,000.

A more recent example also troubles me. I manage a taxable account for client who asked for 

help with her Federal employee Thrift Savings Plan. Since going to work for the Federal 

Government she has 100% of her investment in the Government Securities Fund (Fund G). The 

marketing material she received advised her that this fund may not meet a participant's long 

term goals but gives very little guidance, and certainly offers no one-on-one counseling. In fact, 

there is a statement that does a disservice to employees and is the worst example of competing 

with a negative message (no surprise in Washington DC I guess). It reads, "Other financial 

institutions might try to pull you away from the TSP. Their expensive funds and confusing 

choices can devour thousands of dollars from your savings and, as a result, postpone your 

retirement several years. Don't let that happen to you."

Three years ago I formed an RIA and two years ago we were granted trust powers in North 

Dakota. We don't manage any ERISA business because it's too expensive and the regulatory 

burden is too great. I'd note that as the ERISA business has evolved, it's forced out smaller 

providers who provided more direct service and advice to participants, but I'd also concede that 

these are also where the worst offenders are found in terms of offering high priced products and 

poor or self-serving advice, but I'd also contend that the Department is also driving businesses 

and advisers out of the advice business and leaving participants to fend for themselves with 

more disastrous results for their own retirement.

I'd prefer to see the Department of Labor AND Securities and Exchange Commission work 

together to draft specific rules on fees and products allowed for ERISA plans and IRAs. Two 

suggestions that would go a long way would require retirement share classes of mutual funds to 

have fees no greater than the institutional share class with no 12b1 fees or fee rebates allowed. 

Second, it would ban insurance products such as variable annuities from being offered in 

retirement plans or IRAs. As a financial adviser and fiduciary, those are the two worst abuses in 

the retirement plan industry.

The bottom line is that the DOL and SEC should consider whether they aren't putting good 

advice out of reach of participants in an effort to restrict the bad actors. I applaud 

wholeheartedly the intent of the rules, but the application and consequences should be fully 

considered before implementation.

Attachments

2888-3601-TSP Highlights JanFeb2015

Page 2 of 2

https://www.fdms.gov/fdms/getcontent?objectId=0900006481ac1a0d&format=xml&showor... 5/1/2015